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Old Industries Are The Pits

Railways, coal mining and industrial scale manufacturing were all economic activities that had their origins in the 19th Century. This week has not been a good one for anyone employed in those businesses in New Zealand, with widespread redundancies having been announced. The reasons for the collapse of these industries differ, but they share the historical hallmarks of “creative destruction” as expounded by Austrian economist Schumpeter.

Schumpeter was remarkably prescient for a man of his time. Drawing upon the political organisational theories of both Marx and Weber he concluded that innovation was the primary driver of economic change and that every industry was subject to a cycle of emergence, ascendance and decay. He controversially proposed that democracy could never truly empower the ordinary citizen because the electorate were largely ill-informed or ignorant. His predictions that social democratic governments would emerge in the West (rather than socialist revolution) have largely come true.

None of this will be of any consolation to our miners, factory workers and railway engineers. But it does underline precisely why we need to be moving up the value chain through exporting our knowledge rather than relying upon filthy, dangerous and extractive commodity based industries. After more than a decade talking about it, the penny has finally dropped and the government is now attempting to reorganise commercialisation of publicly funded research and has been increasing the investment in research, science and technology. Bullish talk by government ministers about opening up more public land for mineral exploitation also seems to have faded for the time being. That’s why I spend a lot of my time promoting and supporting knowledge based entrepreneurship and emerging technologies and industries.

Paul Spence is a commentator, technology entrepreneur and is a co-founder of iwantmyname, a New Zealand based global Internet venture. You can follow him on Twitter @GeniusNet

3 thoughts on “Old Industries Are The Pits”

Great post. I largely agree, except that in the United States railways are taking off in terms of volumes of freight moved across the country. A T.I.M.E. article in the N.Z. edition a couple of months ago pointed to substantial interstate increases in freight movement. I think there will be a resurgence in railways here in New Zealand eventually, maybe not in terms of services, but possibly in terms of freight moved.

I heard that rail passenger numbers are holding up in the States as well. Unfortunately NZ simply does not have the same economies of scale. I hope we don’t lose our few remaining rail journeys – at least not before I’ve experienced some more of them.

Agreed on the economies of scale problem, but I’m inclined to think NZ needs to invest in rail as a piece of strategic infrastructure – firstly for public transport in Wellington and Auckland, but more importantly for long distance freight transport. Rail is the most fuel efficient form of transport (so I’ve heard) and using rail for long distance freight transport would get a lot of heavy trucks off the highways, thereby boosting road safety and reducing road maintenance costs. Well, that’s my very simplistic view, doubtless the engineers will be able to pick all kinds of holes in my argument.

And China’s CRH high-speed trains are awesome! I’d love to see something similar zipping up and down both islands’ main trunk lines, but perhaps that’ll only come true in a sci fi novel.